The Role of the Government in the Budget Process
The ultimate role of Government in the budget process is a vital component, as it permits the Government to plan, manage, control, and distribute financial resources to entities that maintains the country’s economic growth. The budgeting proponent of Government is also a pervasive element of authority, frequently controversial, and almost always dissatisfying aspect of Government (Rubin, 2008, p. 5). Budgets provide a roadmap for performance measurement expansion and use, that specifies responsibilities across a wide range of budgetary forms from stakeholders, legislation, and decision-makers, and outlines an interactive process of measurement that positively impacts the practice of budgeting throughout the country (Lu & Willoughby, 2015). Therefore, the budget process provides the medium for determining what government services will be provided and how they will be financed and distributed accordingly based on how controlling lawmakers want to be (Mikesell, 2018, p. 44). For instance, when the governments tax and spend, making decisions within the framework of the budget process is a technique used to provide goods and services (Mikesell, 2018, p. 44). It is also important to understand the budget process because it is essentially the foundational relationship based on trust between states and citizens. Therefore, like any other process, it is crucial for lawmakers to maintain a system that provides a budget balance that provides fairness to both contributions and benefits (Rubin, 2008, p. 12). In essence, it is the responsibility of Government to figure out what is the efficient quantity to produce with the sum of the marginal benefit that is equal to the marginal cost based on consumption that strengthens the process of economic growth (Mikesell, 2018, p.48). 1 Chronicles 29:12, “Both riches and honor come from You, and You rule over all, and in Your hand is power and might; and it lies in Your hand to make great and to strengthen everyone” (KJV, 2021). In all governments, the budgeting process was basically created to guard against administrative abuses (Schick, 1966). Understanding the budget process is very crucial because it determines the final objective of maximizing efficiency with the least amount of cost.
The Role of the Government In Correcting Externalities and other Market Failures
Correcting market failures, is one of the most important responsibilities of the Government. It is theorized that falling markets have an impact on the overall economy of a country. The most scarcity of it all, is when market failures occur and globalization being the norm today, a fall in one country’s market, has a ripple effect on others (Jacobsen, Knittel, Sallee, & van Benthem, 2020). Markets cause the productive capacity of the economy to be used to produce what people want most and cause the least possible amount of resources to be used in that production (Mikesell, 2018, p. 5). When market failures occur, Government must respond with a solution that aids entities from failing, this is done through corrective taxes. Corrective taxes can solve many market failures (Jacobsen, et al., 2020). For example, offering an entity a tax incentive, so they may still provide services without paying taxes. This tax break allows for goods to still be distributed because of demand without failure. Therefore, many policy experts and economists seek possible regulations and interventions for compensating a perceived market failure. For instance, subsidies, tariffs, punitive or redistributive taxation, trade restrictions, disclosure mandates, price ceilings and several other economic distortions are proposed to correct inefficient outcomes. (Holderness, 2017). In many cases, externality-correcting policies rarely take on the ideal form of a direct tax on marginal damages. Actual policies are frequently constrained by administrative practices, or political constraints so that they must place imperfect marginal incentives on products or actions (Jacobsen, et al., 2020). Still there remains an important role for Government, even if private markets can deliver most goods and services reliably and at a low cost; therefore, to minimize market failures, the relationship between a healthy Government and healthy market must be a crucial practice (Mikesell, 2018, p. 5). The outcome for example, is a positive externality, such as vaccinations. People who are vaccinated receive the benefit of a reduced chance of contracting the disease, and also from spreading it to others (Mikesell, 2018, p. 10). Government’s role is to provide protection to its people and its country at all times. Deuteronomy 31:6, “Be strong and of a good courage, fear not, nor be afraid of them: for the Lord thy God, he it is that doth go with thee; he will not fail thee, nor forsake thee” (KJV, 2021).
The Use of Taxpayer Resources to Correct Externalities and other Market Failures
The tax system is used as a solution method to correct externalities and market failures. This practice in Government was created to raise revenue in the Unites States economy. This include the use of tax policy as an economic stimulus or to achieve social objectives. Tax policy can also be used to correct for market failures (for example, the under- or over-supply of a good), which without intervention result in market inefficiencies (Sherlock & Stupak, 2016). Therefore, taxpayer resources are a vital component in Government practices when correcting externalities and market failures. One of the most advantageous utilization of public funds resolves itself into a matter of value preference between ends lacking a common denominator (Key, 1940). The original mission of resources was to expand business practices predated improved public financial practices and constituted a model for Government to maintain its sources when needed (Rubin, 2008, p. 18). For example, using taxpayers’ dollars to control diseases, pollution, and other harmful risks that threaten our society. Therefore, forcing citizens to pay taxes is done because some legal or political constraints make it difficult to finance the services through straight forward taxes (Mikesell, 2018, p.8). This allows a level of control needed to receive services without additional costs and the public along with any entity both win from services provided. When using taxpayer resources to correct externalities and market failures, the Government’s budgetary process must balance financial allocations wisely in order to keep the system from being broken. Romans 13:5-7, “Therefore, it is necessary to submit to the authorities, not only because of possible punishment but also because of conscience. This is also why you pay taxes, for the authorities are God’s servants, who give their full time to governing. Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor (KJV, 2021).
Holderness, H. R. (2017). The Unexpected Role of Tax Salience in State Competition for Businesses. The University of Chicago Law Review, 84(3), 1091-1148. http://ezproxy.liberty.edu/login?qurl=https%3A%2F%…
Jacobsen, et al., (2020). The Use of Regression Statistics to Analyze Imperfect Pricing Policies. The journal of political economy, 128(5),1826–1876. DOI: 10.1086/705553
Key, V. (1940). The lack of a budgetary theory. The American Political Science Review, 34(6), 1137-1144. DOI: 10.2307/1948194
King James Bible (2021) King James Bible Online. Retrieved from https://www.kingjamesbibleonline.org/Bible-Verses-…
Lu, E.Y. & Willoughby, K. (2015). Performance Budgeting in American States: A Framework of Integrating Performance with Budgeting. International Journal of Public Administration, 38(8), 562-572. https://doi-org.ezproxy.liberty.edu/10.1080/01900692.2014.949751
Sherlock, M. F., & Stupak, J. M. (2016). ENERGY TAX POLICY: ISSUES IN THE 114TH CONGRESS *. Current Politics and Economics of the United States, Canada and Mexico, 18(1), 111-159. http://ezproxy.liberty.edu/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fscholarly-journals%2Fenergy-tax-policy-issues-114th-congress%2Fdocview%2F1931134496%2Fse-2%3Faccountid%3D12085